WASHINGTON -- Lawmakers in Washington have only eight days to negotiate a debt agreement that would keep the U.S. from losing its AAA credit rating. The potential of a historic government default has many worried about panicking the markets.
The storyline mirrors the high drama of a soap opera, with unanswered phone calls and accusations of political recklessness. But its impact is far more serious.
Asian stock markets closed lower Monday and U.S. futures fell ahead of Monday's opening bell on Wall Street after weekend negotiations failed to produce a bipartisan deal.
The Obama administration warns that if the federal debt ceiling isn't raised, the government risks not having enough money to pay all its bills.
The man who signs the bills says he believes Washington will come up with an agreement because a government default would cause "irreparable damage."
"There is no choice. There's no alternative. Failure is not an option," Treasury Secretary Tim Geithner said.
It's down to the wire and now there are competing plans. The plan by House Speaker John Boehner, R-Ohio, calls for a short-term deal that would cut spending by a trillion dollars and raise the debt ceiling by a trillion dollars. The proposal would allow the government to pay its bills through the early part of next year.
However, President Obama has already ruled out any short-term deals.
"Then to have to go through this whole exercise all over again. That we're not going to do," the president said.
Democrats say such a plan ignores critical economic warnings.
"Moody's, Fitch, Standard & Poor's have told us 'don't do that.' A short-term extension of the debt ceiling is going to jeopardize our economy," Sen. Dick Durbin, D-Ill., said.
Senate Majority Leader Harry Reid's, D-Nev., plan would raise the debt limit by $2.4 trillion and reduce spending by slightly more.
Although Democrats have been calling for higher taxes in a bipartisan agreement, Reid's plan reportedly doesn't raise taxes.
But it would meet Obama's demand to not bring up the issue until 2013.
"I know the president's worried about the next election, but shouldn't he be worried about the country?" Boehner said.
Experts agree even if a deal isn't reached before Aug. 2 deadline, there's enough money to pay down on the interest. But administration officials say there won't be much left to pay other bills.
Meanwhile, the price of gold hit another record high at $1,620 an ounce.